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Industry Reports

Year-to-date the volume of M&A activity has declined versus the same period last year. However, this does not reflect the health of the broader Cybersecurity market as industry revenues, venture capital funding, and public company valuations continue to increase. The marquee transaction of the 2018 third quarter was the acquisition of Duo Security by Cisco for $2.3 billion at an eye-popping valuation of 25.0x revenue.

Historically low unemployment, high per capita disposable income, and increasing levels of labor force participation among women are helping drive demand in daycare centers across the US. The long-term shift to service-based economies and the increasing emphasis on education by government and families are expected to support global demand for child care and early education as well as the developing markets for back-up dependent care and educational advisory services.

We are pleased to present our 2018 second quarter Cybersecurity Capital Markets, Mergers & Acquisitions Update.In comparison to the first quarter of 2018, there were fewer merger and acquisition (M&A) transactions, but at a higher total transaction value.Capstone Headwaters has observed a parallel trend for M&A activity acrosstheentire middle market as Q2 deal activity dropped by 12.5% relative to Q1, whilethe average disclosed deal value surged by 14.5% during the same period.Within the Cyber security industry,deal activity has been driven by economic growth, demand for cyber s

Within the Interconnect Components industry, merger and acquisition (M&A) activity has remained healthy through year-to-date (YTD) 2018. With 40 transaction announced or closed, M&A volume has approached that of YTD 2017 and is expected to challenge total volume experienced in 2016 and 2017 by year-end. Though M&A activity remains robust in terms of volume, Capstone Headwaters has identified bifurcation in the market.

Growth in the Juvenile Products industry has been driven by robust macroeconomic fundamentals, as historically high levels of consumer confidence and a 2.3% year-over-year increase in real disposable income per capita have generated increased consumer demand. Low cost toy sales ($5.00-$19.99) have driven sales growth of 7.0% in the US Toy industry to reach $7.9 billion in the first half of 2018, according to The NPD Group. The Toy & Game industry is expected to reach a global market value of $132.2 billion by 2022, a compounded annual growth rate of 6.2%, according

Merger and acquisition (M&A) activity in the Security Solutions industry has been robust through year-to-date (YTD) 2018 with 93 acquisitions announced or completed. While the first half of the year was defined by Ares Private Equity Group’s acquisition of Convergint (February) as well as Motorola’s acquisition of Avigilon (March,), the second half has mainly been driven by middle market deals.

Following multiple years of rapid consolidation in the Packaging industry, merger and acquisition (M&A) activity remains unabated through year-to-date (YTD) 2018 with 74 announced or closed transactions. Activity levels have outpaced that of last year during the same period (72 deals in YTD 2017), while strategic buyer share has increased to 68.1% compared to 60.7% for all of 2017. Public company EBITDA multiples remain high with an average of 10.1x after experiencing significant gains in 2017, which have allowed for aggressive inorganic growth initiatives.

Contract Research Organizations (CROs) remain the most targeted segment in the Pharmaceutical Outsourcing industry, accounting for 45.2% of deals to-date in 2018 compared to 38.3% in all of 2017. Buyers have sought to cut clinical trial times and reduce spending through these strategic acquisitions. In August, Capstone Headwaters advised Gibraltar Laboratories on its sale to Sotera Health LLC, a portfolio company of Warburg Pincus and GTCR.